In an appearance on CNBC this morning, House Financial Services Committee Chairman Barney Frank (D-Mass.) made an unusual claim about the mortgage giants Fannie Mae and Freddie Mac. The two mortgage lenders are essentially a "public policy instrument of the government," Frank said.

On Christmas Eve, the Treasury Department lifted a $400 billion cap on the lifeline for the two companies. The move was viewed by many -- including investors -- as a indicator that the two firms will continue to receive billions in direct government support.

Here's Frank:

"Remember now that Fannie and Freddie have been converted...Part of the losses of Fannie and Freddie are that since the housing collapse, Fannie Mae and Freddie Mac...have become a kind of public utility."

Frank also brushed aside suggestions that Congress could soon pass legislation that would reduce mortgage principal for struggling homeowners. Such a program would violate contractual agreements between lenders and borrowers, Frank argued, and could only work if homeowners went into bankruptcy.